Labor Day is a Rubicon in the US. It marks the end of the three-month summer holiday leases that began on Memorial Day, releasing beach homes in the Hamptons, on Cape Cod and Martha’s Vineyard to their owners after another lucrative letting season. The New York practice of slipping away from the office at Friday lunch time has come to an abrupt end. For old-school Southern gentlemen, Labor Day is the last time they can be seen wearing white suits.

Every fourth year, Labor Day signals the start of the presidential race in earnest. So far, the Barack Obama and Mitt Romney contest has been mostly a private affair between political professionals, the hardcore party base and the press. From now on, Americans who don’t care too much for politics will start making up their minds about which man they can live with for the next four years. We are on course for the most expensive election ever: a cool billion will boost Obama, while Romney’s campaign will blow a staggering $1.6bn.

Until now, Romney has been relying on the stuttering economy to drive voters into his arms. At the Republican convention in Tampa, Florida, the central message was that the president had presided over an economic disaster and had had the audacity to blame the country’s plight on the aftermath of the stock-market crash and the subsequent financial freeze that took place in George W Bush’s final months. Obama was pictured as a well-meaning lawyer, out of his depth in the real world of business. Little mention was made about how exactly Romney would cure the economy. Railing against taxes and the size of the government is considered detail enough.

Noises off

The choice of Paul Ryan, who boasts an acquaintance with conservative and libertarian ideology, as Romney’s running mate is meant to allay the worries of the Republican base that Romney is too reasonable to set out on the radical dismantling of the state that they dearly desire and their patron saints Friedrich Hayek and Ayn Rand long ago recommended. Ryan’s appointment, however, betrays the weakness in Romney’s position. Having to spend a valuable asset on shoring up his home fans means he could not use the vice-presidential pick to win over middle-ground voters.

At the Tampa convention, the Tea Party activists and other crazies were mostly kept under wraps. There was no speech from Ron Paul, the party’s true libertarian, nor from the bruiser Newt Gingrich, whose shutting down of the government under Bill Clinton first set the Republican Party on the road to nihilism. Instead, in an attempt to patch up devastating damage done by ignorant, patronising but wholly sincere remarks about rape and abortion made by a would-be senator from Missouri, Tampa was addressed by every presentable woman the party could muster. Among them were Romney’s steely wife, Ann, whose dressage horse pranced at the London Olympics, and Condi Rice, who taught George W Bush everything he knows about foreign policy.

A couple of delegates who were ejected after they threw peanuts at an African-American camera operator from CNN, saying that that was the way Republicans fed animals, were not invited to explain their world-view from the platform. To them, and to the many like them that make up the Republican grass roots, Romney is merely the latest in a line of rich, over educated, closet-liberal moderates foisted upon them by a craven party establishment.

The Republicans are as painfully divided as Labour was in 1970s Britain, with ideologically driven entryists replacing the entrenched old guard in a series of unedifying deselection battles. The new model Republicans are slowly substituting representative democracy with Soviet-style delegates, operating according to a raft of solemn pledges mostly related to lowering taxes, cutting federal government spending and protecting the rights of the unborn. It is a toxic cocktail that tends to frighten away independent and swing voters, which is why the increasingly beleaguered Republican leadership keeps them well away from the stage.

If the election were solely a matter of the economy, Romney should be 5 points ahead. But, despite the persisting misery, Romney is still only neck and neck with Obama in the polls.

Dangerous precedent

It is not merely that Romney finds he cannot defend his reputation as governor of Massachusetts, where he introduced a health-care plan near identical to Obama’s reviled scheme, nor that he finds it impossible to defend his activities at Bain Capital, the asset-stripping company he ran, nor his Mormonism, which is just one step away from Scientology for most Americans, nor his complicated tax affairs, with hidden accounts in Switzerland, Bermuda and the Caymans, nor his vast wealth, which includes, among his many extravagances, a gar - age with an elevator for his fleet of cars, but that people simply do not warm to him.

To his credit, Romney resists all attempts to market him like a male model. He says he does not want to be treated “like a piece of meat”. But you might think someone who has been running for president for the past 15 years and who brags that he knows about sophisticated business techniques would be a little more amenable to the dark arts of selling the candidate. He looks the part and is a strong debater, but, even in the land of endless makeovers and do-overs, there is something thoroughly inauthentic about him.

So does Romney lose? Not necessarily. Forty years ago there was another nimble and entertainingly eloquent chief executive standing for re-election who poked constant fun at his opponent’s wooden persona and starchy delivery. By election day, the incumbent was sailing 10 points ahead of his dreary rival. The voters, however, had their minds on the economy and, come polling day, Edward Heath easily turfed Harold Wilson out of Downing Street. It is the nagging fear that Americans voters are so fed up with austerity that they will vote for a change, even if it allows extreme conservatives within reach of the levers of power, which is deeply unsettling the Obama camp.

Nicholas Wapshott’s “Keynes Hayek: the Clash That Defined Modern Economics” is published by W W Norton (£12.99).